Laird Group weathers downturn: Sharp improvement in non-automotive side and successful legal claim help lift profits to pounds 38m

EXCHANGE rate movements, a successful legal claim for damages and a sharp upturn in its non- automotive side enabled Laird Group to weather a severe downturn in its key German automotive market and lift pre-tax profits from pounds 36.2m to pounds 38.2m in 1993.

Laird's share price improved 19p to 388p on the results and a small increase from 6.3p to 6.5p in the final dividend, taking the total to 10.7p.

John Gardiner, chairman and chief executive, said it seemed wise to take the view that there would be no significant recovery in European car production in 1994 and any progress was likely to come again from non-automotive businesses.

Last year non-automotive profits rose more than 50 per cent, lifting their share of the total from 22 to 38 per cent, implying a fall of 20 per cent in automotive-related profits.

Mr Gardiner, 57, will step down as chief executive in September but remain as non-executive chairman. Ian Arnott, group managing director, will succeed him.

Mr Gardiner joined Laird, then known as Cammell Laird, in 1970 through the Labour government's Industrial Reorganisation Corporation to lead a reconstruction of the company, which was suffering from heavy shipbuilding losses. He added the role of chairman in 1987.

Laird's profits benefited last year from a pounds 2.5m foreign currency translation gain and the pounds 5m settlement of a patent dispute. It suffered a pounds 2.2m charge for redundancies in Germany.

A fall of 20 per cent in German car production last year led to lower sealing systems profits, down from pounds 23m to pounds 18.5m.

This was despite much improved profitability in building seals and higher profits in automotive seals in France and Spain, where Laird has been supplying the new Peugeot 306, Citroen Xantia and VW Polo.

Industrial products lifted profits from pounds 15.5m to pounds 16.2m with much of the momentum coming from increased sales of hardware for windows and doors.

Service industries profits also increased from pounds 7.8m to pounds 10.1m on the back of higher sales to the personal computer industry.

Zafer Khan, an analyst with Strauss Turnbull, is forecasting pre- tax profits of pounds 40m for 1994.

This implies a price/earnings ratio of 18, which Mr Khan said was cheap by auto component company standards.

(Photograph omitted)